RNA interference (RNAi) and related pathways trigger potent and specific regulation of gene expression in eukaryotes. Gene silencing begins with the targeting of messenger RNAs complementary to 21-nucleotide guide RNAs called short interfering RNAs (siRNAs) or microRNAs (miRNAs), ultimately leading to destruction of the targeted transcript. Two specialized cytoplasmic ribonucleases function at either end of this pathway: the Dicer endonuclease catalyzes length-specific double-strand RNA cleavage to produce si- and miRNAs, whereas the Xrn1 exonuclease degrades targeted mRNAs after initial cleavage by the RNA-induced silencing complex (RISC). The central objective of this project is to determine the structural basis for RNA recognition and processing by Dicer and Xrn1 enzymes, and to elucidate the respective functions and interactions of these enzymes with other proteins. The investigation of Dicer builds on our success during the past project period in determining Dicer structures and biochemical activities. The study of Xrn1 represents an important addition to the overall project, aimed at dissecting the mechanism by which targeted mRNAs are destroyed. Focusing on the human and Drosophila Dicer and Xrn1 enzymes, our specific aims are to determine how dicing activity is regulated, to test the roles of double-stranded RNA binding proteins in Dicer substrate specificity and guide strand selection, and to solve and analyze molecular structures of Xrn1. The significance of RNAi as an essential and widespread mechanism of gene regulation in eukaryotes underscores the need for a fundamental understanding of these enzymes. Knowledge of the molecular mechanisms that govern RNAi will enable the engineering of these activities for therapeutic purposes.